Venezuela’s Problem Isn’t Socialism

In the last three years, tragic scenes of poverty and mayhem have dominated the coverage of Venezuela, a nation that used to be one of the wealthiest and most democratic countries in South America. Venezuela has become both a byword for failure and, curiously, something of an ideological hot potato, a rhetorical device dropped into political conversations around the world.

In election campaigns from Brazil to Mexico, Italy to the United States, politicians invoke Venezuela as a cautionary tale of the dangers of socialism. Left-wing candidates from Jeremy Corbyn, in the United Kingdom, to Pablo Iglesias, in Spain, find themselves accused of sympathizing with socialist Chavismo—and suffer real political damage from the association with Venezuela’s rulers. The charge, endlessly repeated, is that Venezuela’s failure is the failure of an ideology; socialism is to blame, and if you make the wrong choice at the ballot box, the chaos of Venezuela could come to your doorstep, too.

Like all good propaganda, this line is effective because it contains an element of truth. The socialist policies of former President Hugo Chávez have devastated the country. Wide-ranging and chaotic expropriations, disastrous price and currency controls, stifling regulations, and unbridled hostility toward the private sector and foreign investment have all helped produce the economic catastrophe that now engulfs Venezuela. Few wars have destroyed as much of a nation’s wealth as have the policies of Chávez and his handpicked successor, Nicolás Maduro.

But also like all good propaganda, the charge obscures more than it reveals. The deeper driver of Venezuela’s implosion isn’t Maduro’s doctrinaire adherence to socialism but, rather, the country’s slide into kleptocracy. To focus on Venezuela as a failure of socialism is to miss the real story: the collapse of the Venezuelan state and the takeover of its resources by a confederation of ruthless criminals from both inside and outside the country.

This dynamic is commonly ignored in much of the commentary about Venezuela, which continues to treat Maduro’s standoff with his opponents as some variant of a recognizable left-right political confrontation. Such commentary tends to describe Venezuela as if it were like other fractious democracies where the battles of rival parties are fierce and occasionally violent. But thinking of Venezuela as a democracy gone wild or just as an example of the failure of socialism fails to fully capture the causes and consequences of the country’s predicament.

In truth, Venezuela’s democracy collapsed years ago. Polls consistently show that four out of five Venezuelans want to see Maduro step down immediately, but no democratic mechanism will fulfill their demand. With elections crudely rigged, the remaining options are all problematic: a foreign military intervention against Maduro remains a remote prospect, as do military and palace coups. Foreign experts and do-gooders, from the Vatican to the Norwegian Foreign Ministry, counsel negotiations and put themselves forward as intermediaries. But attempts to facilitate talks elide the major problem: the opposition in Venezuela isn’t like a faction that sits across the aisle of a normal parliamentary democracy. Members of the opposition are more like hostages—and, in the case of the many political prisoners, are quite literally hostages—of a criminal clique ruthlessly exploiting the country’s mineral wealth for its own benefit.

DEN OF THIEVES

Maduro continues to peddle the rhetoric of socialism, but his authoritarian government has constructed not a worker’s paradise but a den of thieves. The classic twentieth-century Latin American dictatorship—what political scientists called a “bureaucratic authoritarian regime”—was a highly institutionalized affair. An oppressive but efficient state machine, propped up by a large, permanent bureaucracy, worked hard to maintain power and squeeze out dissent. Contemporary Venezuela is nothing like that.

Rather than a professionalized bureaucracy, the Maduro regime amounts to a loose confederation of foreign and domestic criminal enterprises with the president in the role of mafia boss. The glue that holds the government together is neither ideology nor the quest for rigid order: it’s the scramble for the spoils that flow from a dizzying array of illegal sources.

Today, Venezuela is a hub for traffickers in every kind of contraband: from price-controlled consumer staples to cocaine bound to the United States and Europe, as well as diamonds, gold, coltan, weapons, and sex workers. The proliferation of bodegones—semi-legal retailers that flout price controls in hawking contraband consumer goods—has increasingly reshaped the domestic market for what remains of the middle class. These middlemen then funnel the proceeds straight to the friends, family, and accomplices of the governing elite.

Today, Venezuela is a hub for traffickers in every kind of contraband.

But government cronies and the military are not the only ones controlling large-scale criminal enterprises. Sprawling prison-based criminal gangs are the effective civil authority over vast territories, as are rebel fighters from neighboring Colombia’s guerrilla movements. They extort payments from thousands of small businesses, farmers, and ranchers. Some run illegal mines, relieving local authorities of the savage business of keeping order in the mining settlements, and providing the government its last reliable source of foreign currency in the wake of oil sector sanctions.

Back in their air-conditioned offices in Caracas, regime bigwigs sit atop a mountain of loot. Jorge Giordani, one of Chávez’s economic policy chiefs and now an opponent of the regime, calculated that officials had skimmed $300 billion off the top during the oil boom from 2003 to 2014. The precise figure can be disputed, but the macroeconomic scale of Chavista kleptocracy cannot.

Caracas has become one of the world’s capitals for money laundering. Having stolen unfathomable sums, Venezuelan officials and their cronies have forged high-powered friendships around the world. The Washington Post recently revealed that one of Venezuela’s most notorious crony capitalists has retained the legal services of Rudy Giuliani, while Erik Prince, the owner of the military contractor Blackwater, jets to and from Caracas to drum up business. When U.S. and European law enforcement officials look at Venezuela, they see a sprawling racketeering network clumsily hidden behind the façade of a government.

LIBYA ON THE CARIBBEAN

To diplomats charged with managing the fallout of Venezuela’s collapse, the country looks like a failed state. Much of its vast territory is ungoverned and remote from the squabbling politicians in the capital. Since the beginning of 2019, when Guaidó became in the eyes of many inside and outside Venezuela the constitutionally sanctioned interim president, Venezuela has been mired in an unresolved dispute over the legitimacy of its regime. The country risks becoming Libya on the Caribbean: a nation with two governments jockeying for power, each with the support of a separate coalition of foreign nations.

Most major democracies—and more than 50 countries—recognize Guaidó’s claim to the presidency. But within the country’s borders, the men with guns remain loyal to Maduro. He has gone to great lengths to sustain his monopoly on violence, even as he has lost international recognition. In early January of this year, Maduro made one more push to sideline his challenger, installing an erstwhile ally of Guaidó’s as speaker of the National Assembly. Undeterred, Guaidó ignored Maduro’s travel ban and toured the world in January, meeting with Latin American leaders and U.S. Secretary of State Mike Pompeo, as well as with Emmanuel Macron, Angela Merkel, Boris Johnson, and Justin Trudeau, and taking a coveted spot on the plenary speaker roster at the World Economic Forum meeting in Davos. The world’s democracies stand with Guaidó. Yet when in Venezuela, the threat of political prison hangs constantly over his head.

Like Libyans, Venezuelans are learning that having two presidents is a lot like having no president. Bankrupted by corruption, mismanagement, and sanctions that have crippled the oil sector—the main source of foreign currency—the de facto state is broke and living off of the comparatively meager proceeds of illegal mining and illicit oil exports facilitated by Russian companies. The exodus of refugees from Venezuela since 2017 is another unmistakable sign of state failure. Approximately ten percent of the population has left the country in the last few years. Venezuelans are fleeing not only destitution but also the collapse of law and order and of the most basic services: electricity, running water, telecommunications, usable roads, a workable currency, and basic health and education. Refugees aren’t fleeing “socialism”; they’re escaping from a hellishly broken country.

THE CAVALRY AREN’T COMING

Venezuela’s collapse threatens the stability of the wider region. Neighboring Colombia is the country most exposed, but the failure of the Venezuelan state reverberates across the hemisphere, from Brazil, whose northernmost state is straining under the weight of hungry and sick Venezuelan refugees, to Trinidad and Tobago, where flotillas of Venezuelans arrive to a hostile welcome, and to Aruba, a transit point for trafficked people and narcotics.

Venezuela’s leaders have tried to export instability as well. Since the Chávez years and with Cuban direction, the Venezuelan regime has lent enthusiastic support to far-left fringe groups throughout Latin America. Maduro often speaks publicly of his desire to undermine opponents around the region. To the extent that a stable, democratic Latin America is a long-standing U.S. national security priority, the implosion of Venezuela is a problem not only for the security of neighboring countries but for that of the United States.

As Maduro destabilizes the region, the prospect of military intervention to depose him never entirely fades out of view. For more than a year, the Trump administration has made a show of keeping “all options on the table.” This diplomatic formulation—a sly wink at a military intervention—seems aimed more at Venezuelan exiles registered to vote in Florida than at military planners in the Pentagon. Desperate for a quick, magical solution to a problem that has upended their lives, exiles have rallied to Trump’s cause. Unsurprisingly, many Venezuelans clamor for the removal of Maduro and his henchmen.

But foreign governments have little desire to invade Venezuela and risk blood and treasure to force regime change. Latin American countries and the European Union have stridently rejected the suggestion of military intervention. In truth, the United States has no appetite to carry out a major military operation in Venezuela. An invasion—which, to be clear, nobody is seriously contemplating—would risk becoming a tropical quagmire given the presence of armed groups scattered throughout the country. Maduro’s government cooperates closely with Russia on defense, making Venezuela a tricky military theater. And in addition to Russia, China, Cuba, and Turkey would surely oppose any U.S.-led intervention. Many Venezuelan exiles may be convinced that nothing short of outside force will dislodge Maduro, but no foreign government is willing to answer their call.

THEORIES OF CHANGE

Over the last three years, various “theories of change” seemed to offer possible ways out of Venezuela’s current calamity. These theories have so far failed, in many cases because they continue, wrongly, to see Venezuela’s crisis in ideological terms.

Throughout 2017, hopes centered on the ballot box. Activists petitioned for a recall referendum to cut short Maduro’s term in office. Such a measure is enshrined in the country’s constitution, and it seemed the last, best hope for securing an orderly transition. Maduro’s handpicked Supreme Court snuffed it out. Then Maduro won a presidential vote in 2018 widely viewed as fraudulent: top opposition figures were disqualified from running, Maduro’s allies engaged in widespread voter intimidation, no foreign election monitors were allowed to scrutinize the polls, and the media was tightly controlled. In retrospect, the hope that the ballot box could displace a thuggish kleptocracy now looks hopelessly naive.

Having given up on the ballot box, some Venezuelans came to wish for a military coup. Facing economic catastrophe and daily street protests, this line of argument went, Venezuela’s military might decide to oust Maduro before things got entirely out of hand. But a cycle of protests in late 2017 left thousands jailed and dozens killed, and the military remained loyal to the government.

The military moved against the working-class rioters just as ruthlessly as it had the middle-class protesters.

As 2017 turned into 2018, the economic implosion of the country raised the prospect of an uprising of impoverished Venezuelans pushed to the brink by food shortages. Opponents of the regime hoped that the same soldiers who had shown little compunction in attacking middle-class protestors the year before might be less willing to attack hungry people in the slums. After all, Venezuela’s authorities presided over an ostensibly socialist revolution. Once more, an ideological frame distorted the reality on the ground: the military moved against the working-class food rioters just as ruthlessly as it had the middle-class protesters in 2014 and 2017.

The rise of Guaidó as a lightning rod of protest in 2019 inspired further visions of sweeping change. Democratic countries from Chile to Croatia no longer recognized the Maduro regime, and oil income collapsed: surely now the government’s days were numbered. But Maduro responded by doubling down on efforts to fund his security forces through the internationally laundered proceeds of gold mined by desperate, hungry Venezuelans working in slavery-like conditions under the control of armed gangs.

Throughout this period, dovish voices continued to press for a negotiated solution. They hoped that a neutral player in the international community (perhaps Norway or Uruguay) might broker a power-sharing deal that could pave the way to a managed regime change. But Maduro has a strong grip over his criminal enterprise; he felt no compulsion to entertain significant concessions during the various talks that have taken place in the last few years. Instead, he has used negotiations to pit his opponents—both domestic and foreign—against one another.

A BETTER TRANSITION

Any conceivable end game to the Venezuelan crisis will hinge on an internationally backed deal between Maduro and his opponents. But such a negotiation can only succeed once Maduro is convinced it is his last resort. Until such conditions obtain, talks will simply play into his cynical strategy of stringing along his opponents.

Only when the regime feels it has run out of money, friends, and options will a negotiated settlement become inevitable. But to ease an odious regime out of power bloodlessly entails difficult compromises. In Spain in 1978, in Chile in 1988, and in South Africa in 1991, hated figures from the old autocratic regimes kept substantial shares of power through successful transitions to full democracy.

The Maduro regime doesn’t feel its hold on power is truly under threat.